Today I just want to recommend a new book that I recently read: Wade Pfau’s Retirement Planning Guidebook: Navigating the Important Decisions for Retirement Success. If you think of books about retirement planning as existing somewhere along a spectrum of brevity-vs-comprehensiveness, my book Can I Retire is at one extreme (very concise) while Pfau’s Retirement Planning Guidebook is at the other (very comprehensive). To be clear though, just because it is a long book does not mean that it’s hard to read. Pfau digs into the nitty gritty details, but he manages to keep the explanations clear — often by walking you through hypothetical examples so that you can see how the decision process should work, step-by-step. I highly recommend … [Read More...]

I hope you enjoyed the Thanksgiving holiday. The House recently passed the Build Back Better Act, which includes a range of individual income tax changes. It is not, however, a sure bet that the same will actually pass in the Senate and become law. As far as the version passed in the House, it does include a provision that prohibits Roth conversions of after-tax amounts after 2021, which would effectively end “backdoor” Roth strategies. Tax provisions in the Build Back Better Act from Alistair Nevius Recommended Reading What’s a Safe Retirement Spending Rate for the Decades Ahead? from Christine Benz and John Rekenthaler Check Your Redesigned (Easier to Understand) Social Security Statement from Michelle Singletary Smart Tax Moves Before Year-End from Allan Roth Some … [Read More...]

For the Bogleheads on Investing podcast, Rick Ferri recently interviewed Gerry O’Reilly (manager of the Vanguard Total Stock Market Index Fund and ETF) and Rich Powers (Head of ETF and Index Product Management at Vanguard). It was quite a discussion, covering a range of nitty gritty details about how the fund is run. Gerry O‘Reilly and Rich Powers (podcast interview by Rick Ferri) Recommended Reading The U.S. Needs Only One 401(k) Plan from John Rekenthaler The Social Security Trust Fund Is in Better Shape than Expected, for Now from Ginger Szala What if Congress Bans Backdoor Roth and Mega Backdoor Roth? from Harry Sit The Death of the Starter Home? from Ben Carlson Why U.S. Housing Prices Aren’t as Crazy as You Think from … [Read More...]

Smartphone applications (and even traditional websites) are generally built with user psychology in mind: what do we want the user to do with our application, and how do we design the application in such a way that encourages the user to do that? For example, Facebook, Instagram, etc, are built to be as addictive as possible — to get you to interact with as many things on the site/app as possible, to continue using it as long as possible, and to get you to use it as often as possible. What about brokerage apps/websites? If they’re designed in such a way to increase the likelihood that you’ll make a particular financial decision (e.g., trading more often or buying a particular security), at … [Read More...]

In so many tax planning decisions (e.g., which type of retirement account to contribute to, which account(s) to spend from each year in retirement, whether to do Roth conversions, etc.), you need to know your marginal tax rate. And, long-time readers are surely sick of hearing me say this, but your marginal tax rate is often different than just your tax bracket. Especially for somebody in retirement, doing tax planning by looking at just tax brackets is as likely to be harmful as helpful. In an article for Advisor Perspectives this week, William Reichenstein walks readers through a variety of cases in which this distinction is important, and he points out that even respected professionals make this mistake sometimes. Pay Attention to Marginal Tax … [Read More...]